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New Strategies For Sustainable Competitive Advantage

GE ColorXpress

Situation

GE Plastics had received numerous customer survey inputs that their color matching capability was a key customer dis-satisfaction point. (Color matching in plastics is analogous to getting paint matched at a hardware store, but significantly more involved due to processes involved.) Customers complained that color matches took too long (4 – 6 weeks), were too complicated (distributed color labs by product resin family which all used different processes), and had a poor success rate (<60% first pass acceptance by customer).Jeff was chartered by his boss, Jeff Immelt (Current GE CEO), to “Fix this problem, once and for all“.

Approach

Jeff quickly realized that what initially felt like a quality problem clean-up assignment had the potential to be turned into a game-changing competitive strategy. Jeff mapped and benchmarked the existing processes and then built a small team to drive a clean-sheet redesign. He drove this redesign with a Design for Six Sigma approach off a a set of design goals which would deliver true competitive advantage for GE Plastics: 48 hour turnaround time with 99% plus first pass customer acceptance of customer matches. Every aspect of the color matching process was redesigned from the bottom up, including technical process equipment, software and especially every aspect of the user touchpoint interaces with the service process. Color activities were centralized in a greenfield center of excellence facility which soon became known as GE ColorXpress. The redesign, recruiting and construction process took 18 months and the facility was commissioned in mid 1998.

Results

ColorXpress Color And Texture Chips

The GE ColorXpress service advantage was immediately evident and the new process reduced the match cycles from 6 weeks to 48 hours with near perfect acceptance, totally exceeding customers’ expectations. By totally redefining the customer interaction at every point, new levels of customer loyalty were achieved.

Jeff’s team built a Color Innovation center where industrial designers could come to the facility and get colors and visual effects matched in different resin systems while they waited.

Additionally the business developed the capability to delivery Premium Service “Micro-Lots” of custom color resin which commanded pricing 20X – 50X that of normal market pricing.

Jeff received US Patent 6349300 for the implementation of his idea for “ColorXpress Select” an online color matching and browsing tool which allowed remote customers to virtually browse GE’s extensive library of prematched colors, saving time and cost.

Jeff developed a business model whereby ColorXpress Services would actually perform all aspects of global color standards management for Global Accounts such as Compaq and Dell, and turned that service into a revenue stream.

This dramatically improved key process competency facilitated wins of more than $100MM annually of custom color resin business in the following years. The ColorXpress model has an entire chapter devoted to it in Patricia Seybold’s book “Outside Innovation“. Although the business is now known as “Sabic Innovative Plastics” the ColorXpress platform remains a key point of the business commercial strategy, more than 10 years later.

Color Innovation Center

AGY Precious Metal Processing

Situation

As part of its manufacturing process, AGY uses large amounts of the precious metals Platinum and Rhodium to make key process components. At any one time, the company may have hundreds of millions of dollars invested in these parts, representing a sigificant capital investment. AGY relied on an outside supplier for 100% of it’s fabrication, with long part fabrication cycles which in some cases exceeeded the life of the part in the process. Reducing the cycle time and the cost of the alloy fabrication represented a key opportunity to free up capital intensity and reduce costs.

Approach

Jeff developed a strategy to bring the competency to fabricate these parts in house. A new greenfield facility was constructed in AGY Aiken. By purchasing the assets on auction from a competitive fiberglass producer who was going out of business, AGY was able to secure the key equipment required for pennies on the dollar, as well as recruit a key team already experienced in these very specialized fabrication techniques. By using LEAN manufacturing techniques, the business was able to reduce the part fabrication cycle by 75%, significantly reducing the total metal required to support the process.

Results

Jeff’s team commissioned the new facility in 2Q09 on schedule and on budget. Total metal required to support the process are expected to be reduced by more than $20MM, and total reduction in fabrication costs should increase EBITDA by over $3MM.